Question

Hadara Company has accounts receivable of $93,100 at March 31. Credit terms are 2/10, n/30. At March 31, Allowance for Doubtful Accounts has a credit balance of $1,200 prior to adjustment. The company uses the percentage-of-receivables basis for estimating uncollectible accounts. Use the below aging schedule to determine: Age of Accounts Balance, March 31 Estimated Percentage Uncollectible

1–30 days $60,000 2% 31–60 days 17,600 5% 61–90 days 8,500 20% Over 90 days 7,000 50% Total $93,100

The Bad debt expense for the year is Answer 1 The cash realizable value is Answer 2 The total estimated uncollectible is Answer 3

Answer 1

Age Interval	Balance	Percent Uncollectible	Allowance for Doubtful Accounts
1-30 days past due	60,000	2%	1,200
31-60 days past due	17,600	5%	880
61-90 days past due	8,500	20%	1,700
Over 90 days past due	7,000	50%	3,500
Total			$7,280

1.

Allowance for Doubtful Accounts, existing = $1,200

Allowance for Doubtful Accounts, ending = $7,280

Bad debt expense for the year = Allowance for Doubtful Accounts, ending - Allowance for Doubtful Accounts, existing

= 7,280 - 1,200

= $6,080

2.

The cash realizable value = Accounts receivable - Allowance for Doubtful Accounts

= 93,100 - 7,280

= $85,820

3.

The total estimated uncollectible = $7,280